As of July the City of Cape Town wants to impose a Home User Tariff for the electricity it sells.
It will apply to residents who own a prepaid meter in a house worth more than R1 million; or have a credit meter regardless of property value.
Residents who fall into that category will be expected to pay a new, fixed R150 per month, no matter how much electricity they use.
They will then pay a rate of approximately R1.8532/kWh for the first 600 units per month, and R2.1032/kWh after that.
The change is due to big savings in electricity use thanks to energy savers such as solar geysers and power saving bulbs. Those have seen fewer people paying paying large electricity bills – where subsidies for the poor and maintenance costs were built into the per-unit charge.
“Due to the decline in usage, it is not possible to rely on electricity consumption to cover fixed costs as this will lead to unequal distribution of costs among the customer base,” says the city.
It needs to find a way to cover a shortfall to pay for fixed costs, which make about 30% of the typical bill – even if consumption continues to drop.
Money generated from the Home User Tariff would go directly into services like repair and maintenance of power lines, sub-stations, transformers and electricity meters.
Cape Town is also dealing with rising costs from cable theft and illegal connections.
Assuming the average South African consumes at a minimum average of 230kWh per person per month, then under the new tariff a family of four would pay R1,932.94 for electricity; a two-person household R1,002.47; and a 6-person household pays R2,902. 41.
With the fixed-cost component built in, decreasing power use will have a less dramatic impact on electricity bills than before. Especially if everyone starts saving more – and the city increases the fixed-cost component to compensate.
*The "current" prices have been corrected and updated.
The current Domestic Tariff works as follows: